Why has Info Edge stock been such a star performer in the last few months? What is the big story cooking there?
Answer
Answer
Info Edge that owns pioneering Naukri.com has been one of the star performers in the last few months. In fact, the stock has almost tripled over two years. While its robust ecommerce platform is a reason, it is also about smart PE investments made by Info Edge.
Info Edge runs Naukri.com, India’s pre-eminent job-hunting platform. In addition, Info Edge has investments in around 23 start-ups. This includes a significant stake in food delivery Zomato and a major stake in Policybazaar.
With Zomato hiring investment bankers for a proposed IPO and Policybazaar seeing no dearth of interested equity investors, Info Edge is seeing a value explosion. Is the P/E ratio of Info Edge at above 125, really a worry for the markets?
Remember, while Info Edge gets most of its revenues from search portals for jobs, matrimony, real estate etc, the high 125 P/E is less predicated on the current earnings and more on the potential value explosion from its ecommerce investments.
Both Zomato and Policybazaar, which have been mentored by Info Edge have got top-dollar valuations. The same is expected to apply to its other digital investments too. For the time being, it is largely a value unlocking story and also an important total life cycle play.